• Germany's news in English
 

Merkel's bailout fund hits 'stumbling block'

Published: 22 Jun 2012 12:21 GMT+02:00

German lawmakers are due to ratify both the pact and the bailout fund on June 29, but President Joachim Gauck's decision to delay signing meant the planned timing for the European Stability Mechanism (ESM) bailout fund to enter into force on July 1 would no longer stand.

Many in the German media supported Gauck's decision to give the Constitutional Court up to three weeks to consider a legal challenge put forward by the far-left Linke party.

In doing so, the President had skilfully "avoided an unprecedented constitutional conflict,” the Süddeutsche Zeitung said on Friday.

By buying the court enough time to properly examine the challenge, both Germany's highest institutions could "escape the accusation of destroying the Euro with a rushed decision."

And given what is at stake for Germany, more scrutiny of the the planned ESM permanent bail out fund cannot be a bad thing, said the Münchner Merkur.

After all, Germany will be responsible for 27 percent of contributions to the ESM fund - expected to contribute €21.7 billion in cash and provide guarantees worth a further €168.3 billion.

It is for the ESM "that Germany has got itself up to the neck in financial adventures," the Munich-based paper added.

Daily paper Die Welt also showed sympathy with the President, who it said had taken a "political risk" when called upon to address "the core question of how German democracy and European politics can coexist in peace."

"In the case of the bail out law, Gauck alone has the answer and also the responsibility. Only his signature gives it legal force in Germany."

It is at times like this, said the paper, that Presidents show their "enormous power," which is enough to challenge even the will of the Chancellor.

And the move is indeed a further blow for Chancellor Merkel, whose "room for manoeuvre is getting smaller," said the left-leaning, Hannover-based Neue Presse.

Having - after long negotiations - finally succeeded on securing support from the opposition parties for the fiscal pact on Thursday, Chancellor Merkel was immediately dealt another "stumbling block," wrote the paper.

Chancellor Merkel - and those looking to rescue the euro - had been hoping for a "strong signal from Germany" said mass-circulation daily Bild. Instead, all they got was "a hammering" from the Constitutional Court.

The Local/DPA/jlb

The Local (news@thelocal.de)

Your comments about this article

15:41 June 22, 2012 by Bushdiver
This is something that should have happened a long time ago. The idea of just throwing money away has to be regulated. Merkel hands out money like clowns hand out balloons at a party. If Germany would not be up to their necks in loses should the EU and Euro fail they would probably just let this collapse.
14:01 June 26, 2012 by Leo Strauss
Speed bump on the Autobahn to national insolvency.
12:21 July 5, 2012 by AlexR
"Germany is not bailing out Europe, it is rescuing itself"

The ECB and eurozone governments, as well as bailing out other members states, have quietly been rescuing German banks and, by extension, German savers. Without these emergency operations, the eurozone would have broken up, German banks would have gone bust and the savings of many ordinary Germans might have been wiped out. More likely the German taxpayer would have had been forced to bail out those banks.

So, as the German people distribute blame for the situation in which they find themselves, they should not ignore their own bankers. If those institutions had not made these investments and financed the current account deficits of Germany's neighbours for so many years, their country would not be on the hook for hundreds of billions of euros of bad debts.

Yet this is something German politicians refuse to acknowledge.

h--p://www.independent.co.uk/news/business/comment/ben-chu-germany-is-not-bailing-out-europe-it-is-rescuing-itself-7912743.html
22:23 July 9, 2012 by ceterum censeo
Great, there was no man in Germany to stop Hitler but wish President Joachim Gauck is the man to stop Merkel.

The euro crisis is man-made by Merkel and Sarkozy, who intervened into Greek insolvency, likely to help some German and French mismanaged banks out from their liability.

All and any banks willingly help anybody to get indebted too much if the credit liability is by political decision taken to the taxpayers. Prudent and responsible management of public or private funds is not made by agreements of any kind but with the controlled money supply. When the banks bear their credit responsibility, they shut off the money supply in time. This is the only way and one of the fundamental principles of the economy. European Stability Mechanism (ESM) is just the opposite, to break the principle of good management, in fact a radical neocommunist idea.

The Greek debt is 30% over the GDP and such a debt has never been paid anyone else but the inflation. Greece is a sovereign state, which bankers cannot execute by an auction. It can simply stop paying the debt but is wise Greece shall pay its debt to the last cent with 30-year bonds. Along the time, the Inflation will erode the real value of these bonds to the loss of the creditors but their books stay sound, as the bonds are long term receivables. No crisis will be anywhere. You have not even heard about the case in 1987, when Brazil paid its outstanding foreign public debt this way. The inflation of dollar made the real value of these bonds in 2006 to be at 20% of the face original value and Brazil paid them in advance.

Having no new credit available, but old debt "frozen" at least for 30 years in bonds, Greece must and can adjust its economy without any social crisis.

European Stability Mechanism (ESM) and all related measures shall be annulated, the EU governments shall each focus in managing and ruling of their own countries, let the market economy work free and EU shall continue its valuable service as an platform of cooperation between the independent member nations, being in service, but not in charge.

There is no reason to anyone get out of euro, not to expel anyone of it, unless someone starts issuing counterfeit money and destroy its value by inflation.

Euro is just a monetary unit to measure the value of goods and services, as meter is a unit to measure the length and kilogram to measure the weight. We may substitute any of them with new ones, but the things will no be changed.

Merkel and Sarkozy made fatal mistakes and may not have the character to admit and retreat. Thanks Frenchmen, Sarkozy is now out and thanks President Joachim Gauck, Merkel will go.
18:51 July 11, 2012 by Vultch
At Alex R

Germany is indeed rescuing Europe, when banks loan money to countries (buy bonds) the is an agreement that the money will be paid back. If said countries are run by buffoons whose grasp of economics would make a third world dictator blush - being dictated by backhanders/bribes then its up to the countries respective populations to act and vote the clowns out. I find it ridiculous to blame the lenders..they were lending to governments not crack addicts living in Glasgow.
16:09 July 14, 2012 by luckylongshot
The fundamental problem with the ESM is that trying to solve the problem of too much debt with even more debt cannot actually solve the problem. What is needed to fix the problem is debt reduction to the point where the weak economies in Europe can function profitably. With this in mind it seems cleaar that the ESM is just a technique to transfer mountains of bad debt from the banks to the public. My hope is that the President realises this and kills the ESM and this leads to an initiative that can actually help solve the crisis emerging. What is on the table now only benefits the bankers.
22:25 July 30, 2012 by friedenstempel
The Karlsruhe judges will save us.
Today's headlines
Rail strikes continue after union rejects talks
Rail strikes have affected millions of travellers. Photo:DPA

Rail strikes continue after union rejects talks

An attempt by Deutsche Bahn (DB) to bring the current round of rail strikes to an end failed on Wednesday. The strikes are set to continue until Sunday. READ  

Italian faces charges over Blockupy violence
A police car burning during the violence. Photo: DPA

Italian faces charges over Blockupy violence

Prosecutors in Frankfurt confirmed on Wednesday they are pressing charges against a 23-year-old Italian in relation to violence which broke out at anti-austerity protests in March. READ  

Bayern on the brink after Barca defeat
Bastian Schweinsteiger reacts against Luis Suarez. Photo:DPA

Bayern on the brink after Barca defeat

Barcelona beat Bayern Munich 3-0 in the Nou Camp on Wednesday evening to put the Bundesliga Champions on the edge of a second successive exit at the semi-final stage of the Champions League. READ  

Siemens to cut 4,500 jobs worldwide
Photo: DPA

Siemens to cut 4,500 jobs worldwide

German engineering giant Siemens said on Thursday that it would slash an additional 4,500 jobs worldwide, on top of 7,800 cuts announced in February as part of an ongoing restructuring plan. READ  

De Maizière denies any wrongdoing in BND affair
Thomas de Maiziere after questioning by parliamentary committee. Photo: DPA

De Maizière denies any wrongdoing in BND affair

Germany's opposition kept up its attack on Angela Merkel's government Wednesday, charging that it did nothing to stop its foreign intelligence service spy on European politicians and companies for the United States. READ  

Could Europe have ‘border-less’ internet?

Could Europe have ‘border-less’ internet?

The European Commission presented a plan for making the internet and digital content more ‘border-free’ on Wednesday, suggesting ways to loosen up restrictions that often see music, movies and other services blocked when users travel across borders. But could such a plan succeed? READ  

Germany sees drastic rise in racist crime
A refugee home was burned down in April 2015. Photo: DPA

Germany sees drastic rise in racist crime

Crime figures released by the Interior Ministry on Wednesday showed sharp rises in xenophobic crimes in 2014, with anti-Semitism and attacks on refugee homes causing particular alarm. READ  

Daredevil pensioner in reckless road rampage
Need for speed - not the man or vehicle in question. Photo: DPA

Daredevil pensioner in reckless road rampage

Police in Meschede, western Germany, were astonished when a car overtook them on the wrong side of a state road, only to discover that the dangerous driver was 76 years old. READ  

Doctor acquitted in organ donation scandal
The prosecution team in Göttingen. Photo:DPA

Doctor acquitted in organ donation scandal

A court in Göttingen acquitted a doctor on Wednesday of charges of attempted manslaughter after he had manipulated patients' data to push them up the organ transplant list. READ  

Not forever young, but a champion at 85
Melitta Czerwenka-Nagel. Photo:DPA

Not forever young, but a champion at 85

Long-distance runner Melitta Czerwenka-Nagel has broken so many world records she's stopped counting. And at the age of 85 she's not lowering her sights. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
National
Why Germany is great for mums
Features
The Germans with GI dads
Five ways Germany falls short on gay rights
Travel
Giant tortoise found riding Munich rail
National
FCK CPS? A-OK with court
Politics
Opinion: Brexit's dangers for Germany
Features
Smart kids all want to work for BMW
National
Minister shows off top Denglisch
National
Germany's 'other genocide' in Africa
National
Arms firms get a 'must do better' mark on ethics
Sport
Bayern's anticlimactic 25th Bundesliga win
Politics
A Greek learning politics in Germany
Features
The battle of the "Gates of Berlin"
National
Germany's 'very poor' lobbying record
National
Germany's favourite baby names of 2014
Politics
Merkel's 15 years at the top of German politics
Travel
Lowest of the low: how woman exploited Germanwings crash
Features
Spice up asparagus season with The Local's serving suggestions
Sport
Football and the €30,000 firework
Technology
Why scientists oppose killer robots
National
'Cannibal cop' gets 8 years
National
Which city is Germany's worst for drivers?
Technology
Electrifying 'Ostalgia'
National
Cologne Cathedral returns from space
Pupils mourn lost classmates
National
Freed after 25 years on death row
Shutterstock
Sponsored Article
10 things you didn’t know about Zagreb (and why you should go)
Is your workload 'out of control'? You're not alone...
Sponsored Article
What expat parents should ask before choosing a school
Features
Paddy's Day, Berlin style
National
Why east Germans are happy to get it on on camera
National
Uplifting thoughts to get you through the last week of winter
National
What would you do with a 250-year-old pretzel?
National
Who wants the Olympics more - Hamburg or Berlin?
Features
Just why is the German flag Schwarz, Rot, Gold?
Business & Money
Getting German workers and bosses thinking positive
National
German photographer takes world's top prize
National
Last-minute drama of Germany's Eurovision 2015 entry
Features
Meet the woman getting Germans to drink more – and better – beer
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

7,246
jobs available
Toytown Germany
Germany's English-speaking crowd
?>